Planning for year-end gifts with the gift tax annual exclusion

The amount you can give to a person without the quality of life impacts the gift tax annual exclusion; if you outdo the gift tax annual exclusion, you will be responsible for paying taxes on that amount at their highest rate. Whether or not it was taxed when paid to someone else as a gift, you must pay taxes on this amount.
The limitation does not apply if the property is transferred directly by one person to another and is not applicable even if someone other than the giver receives something from what has been given as a gift. However, generally speaking, gifts with an aggregate value exceeding $14,000 per recipient per year are subject to an additional three percent (3%) excise tax. Tax lawyer, attorney, CPA, and others are available to help you with the statutory modifications.

Gift-splitting by Married Taxpayers

If the donor is married, they can split a gift worth up to $28,000 between them. An exclusion of $14,000 gift tax annual is attributed to the first spouse, and then another $14,000 can be gifted from the second spouse’s individual $14,000 level. The first spouse will pay taxes on their portion at the top marginal rate of up to 35%. The additional 3% excise tax does not apply for the additional $14,000 gift because it falls within the second spouse’s gift tax annual exclusion.
If you are married filing separately or in a community property state, you don’t receive a second $14,000 exemption under this rule. Suppose you have gifts that exceed $28,000, then you can to claim a deduction. The top marginal rate is up to 35%, and the additional 3% excise tax does not apply for the additional $14,000 gift because it falls within the second spouse’s gift tax annual exclusion.

“Unified” Credit for Taxable Gifts

The unified credit amount of $3.5 million is the amount of money you can give away and not be subject to paying tax on it. For example, if you are married filing jointly, and both gave your children $8,000 each, you have gifted a total of $16,000, and the gift is not taxable. If you give them more than that amount, then it is taxable at higher rates.
The unified credit includes gifts that are not taxable. For example, if you give your children $50,000 each in 2019 because they are graduating from high school and starting college next fall. There is a total of $450,000 of gift tax annual exclusion for 2019, which means $0 has to be paid for the unified credit.
For most people, the unified credit will cover all their taxable gifts during a calendar year. Therefore, there is no reason to try to claim any of them unless you want to spread your gift giving over four years or longer. You can file a gift tax return $15,000 in a year.


Year-end gifts can be a very stressful time for people. The gift exclusion is an excellent way to reduce the amount of taxes you have to pay. Be sure to check with your income tax attorney if you have any questions regarding year-end gifts.

Guardian Tax Law

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